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China Daily Website

Time ripe for FTA

Updated: 2012-05-14 08:04
( China Daily)

Close neighbors as they are, China, Japan and the Republic of Korea have no reason to seek far and wide for what lies close at hand.

The trilateral investment agreement the leaders of the three countries signed in Beijing on Sunday is a necessary building block for their grand plan of establishing a trilateral free trade area.

They came up with the idea of building a free trade area among themselves in 2002, and the three countries are likely to begin negotiations on an agreement sometime this year.

Certainly the time is ripe for the three countries to talk officially about setting up a free trade area.

A free trade agreement between China, Japan and the ROK, the first, second and fourth largest economies in Asia, which together account for 70 percent of Asia's GDP, would have deep strategic significance for the three countries given the changes taking place in the international environment.

The global financial crisis has taught us a profound lesson: it is too risky to rely on the United States and Europe as the main destinations for our exports.

But a trilateral free trade agreement would be important in its own right as integration of the three markets would help push a further opening up of the global trade system and would become the cornerstone of Asian regionalism.

The economies of the three countries are closely related. Establishing a free trade agreement, including the reduction of tariffs, would benefit all three economies in the future. That is why the three countries are positive about its prospects.

However, negotiations on a free trade agreement between the three nations will be difficult because of their different economic structures.

China has the lowest level of industrialization of the three. It has many areas to worry about in opening up its market, especially technology-intensive manufacturing areas such as iron and steel production, petrochemical engineering and automobiles.

For their part, Japan and the ROK are concerned about opening up their agriculture sectors.

On top of these concerns, territorial and historical issues cast shadows over their relations. Every now and then politics take precedence over trade between the three countries, which are still plagued by trust deficits.

The three countries will need to bear in mind that their trade negotiations will suffer if controversy erupts over these issues.

(China Daily 05/14/2012 page8)

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